Low natural gas prices have hampered even the big boys, such as diversified Exxon Mobil (NYSE:XOM), so Oklahoma-based Devon Energy (NYSE:DVN) absorbing a 7% year-to-date loss shouldn’t be much of a surprise.
Devon, which is involved in the exploration, development and production of oil, natural gas and natural gas liquids, is being squeezed by the commodity’s glut. The price of natural gas liquids — which include ethane and propane — dropped because of increased supplies and a warmer-than-normal winter, particularly in the Northeast and Middle Atlantic states.
The proof is in the pudding. DVN’s second-quarter earnings dropped almost 80% to $477 million, and adjusted earnings of 55 cents per share came in well short of analyst forecasts of 81 cents.
Still, there’s a few reasons to take heart. For one, 2011’s net earnings got a huge boost from a one-time $2.5 billion asset sale in Brazil, accounting for the huge gap down in 2012. Plus, this year’s Q2 revenues of $2.56 billion surprised to the upside. Best of all, natural gas prices have surged by roughly 70% in recent months.
While Devon is expected to take a huge step back this year, earnings growth is expected to rebound by more than 30% in the next fiscal year. That should help put some more giddy-up in this Sooner’s steps.
Florida’s Carnival Corp. (NYSE:CCL) isn’t having quite the same difficulties of some our other Real America Index companies, but it’s not exactly thriving. CCL is up just 2% vs. the S&P’s 10%, and with weak second-quarter earnings — down 93% from last year — it could be rough seas ahead for the remainder of the year.
Carnival’s balance sheet still is feeling the backlash of January’s Costa Concordia crash off the coast of Italy, which claimed at least 25 lives. In fact, the entire industry, including rival Royal Caribbean (NYSE:RCL) still is feeling ripples from the incident — it might just take some time for customers to get back on board.
However, Carnival is making an effort to ramp up its marketing efforts, including adding new cruise packages to Europe this year and Alaska in 2013 through its Holland America Line. Fuel costs should be coming down to help with margins, and consumers are perhaps finally finding some discretionary funds in their accounts to take that long-awaited cruise vacation.
Still, CCL’s stock has proven resilient, actually up roughly 15% since its post-crash lows, and only off about 2% since the crummy Q2 report. The bottom line? Investors might be rewarded for braving this stock’s rocky waters — and they can get in at a 3% dividend yield.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities.